Pr. Commissioner of Income-tax-2, Bengaluru & Anr. v. M/s. Karnataka Power Corporation Limited

1. FACTS OF THE CASE

For AY 2002-03, the 10 February 2005 assessment left the section 80IA deduction undisturbed. Section 263 revision concerned only donation of assets of Rs.2,18,08,292 and loss of assets of Rs.2,19,73,292. Following the Tribunal proceedings, an effect order was made on 20 October 2011. On 28 March 2012, the AO purported to rectify that order by withdrawing the Rs.80.55 crore deduction. CIT(A) rejected the appeal on 22 November 2016; ITAT held rectification late on 11 January 2021 in ITA 282/Bang/2017.

Source: Paragraphs 1,3–5,9–10; PDF pp.2–5,7–8

2. DISCUSSION BY THE COURT

The Court identified the issue actually changed, rather than accepting Revenue’s description of the later order. Section 80IA had not been a subject of the revision or Tribunal appeal. Rectification of the 2011 effect order could not go beyond those two revision issues. Withdrawal of the untouched deduction was effectively rectification of the original 2005 assessment; limitation under section 154(7) therefore related to that original order.

Source: Paragraphs 9–11; PDF pp.7–9

3. JUDICIAL DECISION

Revenue’s appeal was dismissed and the substantial questions answered for the assessee. The 28 March 2012 rectification was barred by limitation.

Source: Paragraphs 11–12; PDF pp.8–9

4. OUTCOME

The Tribunal’s limitation relief survived. The Court did not independently adjudicate substantive eligibility or recompute the section 80IA deduction; the withdrawal failed because the rectification was late.

Source: Paragraphs 10–12; PDF pp.8–9

5. Expert Comments

AKHB editorial analysis, distinct from the Court’s findings.

Map each later order to the issue it actually decided

The revision dealt with donation and loss of assets, leaving section 80IA untouched. That issue-specific history defeated the claim that the 2011 effect order supplied a new starting point for rectifying the deduction. In another record, compare the revision directions, appellate issues and effect order before selecting the order relevant to limitation.

Source: PDF p.3 · PDF p.4 · PDF p.7 · PDF p.8

A later date did not reopen an unchanged deduction

Revenue’s broad merger argument could not overcome the limited subject matter of the intervening proceedings. The holding does not say every later order is irrelevant: the decisive fact was that this deduction had not been considered in those proceedings. Nor does the judgment determine whether the proposed withdrawal was otherwise a mistake apparent from the record.

Source: PDF p.2 · PDF p.3 · PDF p.8

Limitation success is distinct from substantive deduction approval

The practical result preserved the Rs.80.55 crore deduction against this rectification attempt. It is not an independent merits ruling on power-unit losses or a fresh computation of eligible profits. The source identifies the original order and finds the 2012 action outside four years; it does not supply a separately worked last-day calculation or rely on named merger precedents.

Source: PDF p.4 · PDF p.8 · PDF p.9